Welcome to Twist Biosciences Fiscal 20 2Q4 and Full Year Financial Results Conference Call. At this time, all participant lines are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference call over to Jim Thorburn, Chief Financial Officer.
Thank you, operator. Good morning, everyone. I'd like to thank you all for joining us today for Twist Biosciences conference call to review our fiscal 2020 Q4 and full year financial results and business progress. We did issue our financial results this morning, which is available at our website, www.twistbioscience.com. With me on today's call is Doctor.
Emily LaProst, CEO and Co Founder of Twist. Emily will begin with a review of our recent progress on Twist Business. I will report on our financial and operational performance, and Emily will discuss our upcoming milestones and direction. We will then open the call for questions. As a reminder, this call is being recorded.
The audio portion will be archived in the Investors section of our website and will be available for 1 week. During today's presentation, we will make forward looking statements within the meaning of the U. S. Federal securities laws. Forward looking statements generally relate to future events or future financial or operating performance.
Our expectations and beliefs regarding these matters may not materialize, and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission. The forward looking statements in this presentation are based on information available to us as of the date hereof, and we cannot at this time predict the full extent of the impact of the COVID-nineteen pandemic and any resulting business or economic impact. We disclaim any obligation to update any forward looking statements, except as required by law. With that, I will now turn the call over to our Chief Executive Officer and Co Founder, Doctor.
Emily Leprost.
Thank you, Jim, and good morning, everyone. Fiscal year 2020 has been a transformative year for Quest. In early December of last year, we reported our results from fiscal 2019 and provided revenue guidance of $80,000,000 to $84,000,000 for fiscal 2020. While we withdrew that guidance given the uncertainty of the pandemic and the closure of many customer sites, extremely pleased to report record revenues of $19,100,000 for fiscal 2020 $32,400,000 for the quarter. Our strength in revenue was driven by the innovation and commitment to execution from our entire team at Swiss.
They worked through exceptional and chartered circumstances to deliver great products to our customers. Against the incredibly disruptive backdrop of the COVID global pandemic, we delivered growth in our product lines and added new products to specifically address the evolving SARS CoV-two virus. I'd like to note that unlike some of our peer companies, our record revenue is not a function of COVID-nineteen related products. And in fact, while our synthetic RNA controls for SARS CoV-two and our NGS partners to sequence the virus definitely contributed to our revenue, it is our stable Syn Bio and NGS products with growing initial revenue from our biopharma division that has catapulted our success this fiscal year. Illustrating our momentum, we reported record orders of almost $117,000,000 for the full year with $42,700,000 for the Q4, setting the stage for growth into 2021.
Diving into the business, I'd like to begin with synbio, where we reported $43,800,000 in revenue for fiscal 2020. Over the course of the year, we focused on building out our product line specific to biopharmaceutical and biotech customers. We introduced new preparation of DNA specific to our customer needs on time and on budget, in addition to building the capability to provide IgG antibodies at scale. DNA Pratts, as we call them, launched in the Q2, and we are seeing customers engage in diligence and initial orders gaining traction. In the Q4, we received initial IGG orders from our early access customers, and we expect revenue to ramp up moving into and through calendar 2021, now that the capacity is available internally and while we are building the e commerce infrastructure.
In addition to products for pharma customers, we expect to launch clonal ready gene fragments in the next month. These products will be useful for the long tail of the market for those customers who need a few genes at a time. Often these are academic customers who make their own jeans instead of buying them. As we look ahead into fiscal 2021, we have two areas of focus. The first is on what we call the factory of the future.
This is the next evolution of our platform, which we expect to launch in 2022 and will allow us to bring additional differentiation including a faster turnaround time for all of products. We anticipate our factory of the future will double our current capacity and will serve as the secondary manufacturing site outside of the Bay Area. We believe this facility will provide us the capacity to scale revenue to $500,000,000 and we look forward to evolving our business to add new differentiators to unlock segments of the similar markets we cannot address today. The second focus would be around our business to business capabilities. Currently, we have an exceptional frictionless e commerce system that tracks orders from initial purchase to shipment.
We are now focused on building capabilities to facilitate business to business interactions that will expedite all our placements to enable us to be an approved vendor within certain systems. For instance, currently a customer in the University of California is required to generate a PO within their accounting system before placing an order. A B2B integration will enable these customers to place an order on our website without needing a specific PEO from their institutions, removing significant barriers to order. Moving to genomics and targeting NGS. We launched our NGS product lines in 2018, and I am pleased to report that for the first time, revenue for the fiscal year is approximately equal to our synbio revenue.
This is an exceptional testament to the power of our platform to disrupt established markets and offer innovative products to support our customers' drive to improve health and sustainability. We expect continued growth for this product line, particularly as it is a long sales cycle and many of our customers are using our products for clinical trials. The timing of the SKUHUB and the associated revenue ramp for Twist is dependent on their success in the clinic, and we're confident in the growing revenue stream,
but we do expect it to
remain lumpy in the near term. In fiscal 2020, with the emergence of COVID-nineteen, we launched a new product line of synthetic controls initially for fast COVID-two and subsequently for other respiratory diseases. These controls can be used to develop and routinely ensure that diagnostic tests accurately detect pathogens. This product line as well as our COVID-nineteen specific panels opened the opportunity to pursue new customer. And we have now shipped controls and COVID-nineteen panels to 841 customers as of September 30.
These customers are now familiar with Swiss and we are working to sell additional products into the these accounts. In addition to the controls, we now have an infectious disease product line, which we believe will be critically important moving forward as we continue to fight COVID-nineteen while navigating ongoing outbreaks. To that end, last week, we launched the comprehensive viral panel, which screens over 3,100 viruses. Continuing to our product line expansion. We introduced our methylation solution earlier this year to our early access customers.
We have provided great feedback to date. We expect to make these products available more broadly in early 2021. In addition, we intend to add multiplex indexing to our product mix, a highly technical workflow extension to our current universal dual indexes. We believe this will better support customers developing liquid biopsies and cancer diagnostics, further differentiating our product offering. We continue to focus on converting customers who are currently using SMIT macro wave technology, and we have had some incredible success in this effort with a very large customer making this switch in the Q4.
We expect to continue our success in winning new accounts with this approach. And moving into fiscal 2021, we see a significant opportunity to pursue conversion in AgBio, where SNP macronary is very common with millions of samples processed every year. While the cost per sample is smaller than in Healthcare, the order volume is much larger. In addition to Syn Bio NGS, we see growth coming from the expansion of our OEM strategy. We strive to own the workflow upstream from sequencing and leverage the channel reach of other companies.
We now have 13 different companies selling our NGS and Syn Bio products under their brand name. And this unique strategy has allowed us to book approximately 5 to 6 months of revenue in fiscal 2020 and it is poised to grow. Turning to our vertical market opportunities. Our Biofron business continues to excel. Over the course of fiscal 2020, we anticipated that we will sign 5 to 10 partnerships, and I'm pleased to report that we have signed 13 revenue generating partnerships with 8 including milestones and overall fees.
4 of them were signed during the Q4 of fiscal 2020 and our pipeline of opportunities remains robust. We are now beginning to deliver data for our partners who signed on earlier this year and our platform continues to impress. We look for ways to share this data and associated clinics, but given the confidential nature of our partnerships, it may not be possible in all cases. And in addition, public release of this information is dependent on our partner's approval. In addition, we reported preclinical data for 3 proprietary antibodies that we discovered using our biopharma library platform.
With that I showed 2 of our single domain VHH nanobodies protect against weight loss at all those levels, including the lowest dose of 1 milligram per kilogram in preclinical Amster models of SARS CoV-two. In addition, the 3rd IgG antibody discovered through Twist collaboration with Vanderbilt University Medical Center was found to protect against weight loss at 5 10 milligrams per kilogram. While we may out license these antibodies for a wide range of opportunities, the proof of concept validation for our ability to go from target to effective antibody data in preclinical model is helping us build a robust pipeline of potential partners for biopharma verticals. We have demonstrated that we can monetize our biopharma platform through revenue generating partnerships. And our next evolution is to generate antibodies against our own targets and then license them out for further development.
We have identified 7 key disease targets where we believe our biopharma platform can generate differentiated antibodies. We intend to advance development of these targets through our discovery and optimization platform, and we will be pursuing out licensing opportunities for these antibodies over the next 18 months. Moving to data storage. Last quarter, we reported an important technical breakthrough that we believe will facilitate further neaterization of our silicon technology. We continue to make very good progress and we are now producing synthetic DNA for data storage on 5 micron devices, spaced 10 microns apart from each other, a dimension called the pitch.
This is an incredible accomplishment and important step on our technology roadmap for DNA data storage. Right now, we are using this chip in an R and D capacity to actual volumes to demonstrate that it works. In parallel, while ensuring that it works, we already designed and have received our next silicon chip with even further miniaturization. The second chip has 300 nanometer devices on a 1 micron pitch. With each engineering and technical accomplishments, we work within the chip in an R and D capacity first to be bigger.
Once we have a working prototype, we then move it into the development phase, while in parallel designing the next miniaturization of the chip, taking into account our experience with each iteration. Ultimately, we plan to scale down to 150 nanometer pitch or less. Once we achieve our target chip design, we will flow the same pathway of debugging and developing. And for the final iteration, we will focus on scaling up to full commercialization. This is the same process we used for our current commercial scale silicon platform to have experience and success to build upon.
In addition to our technical progress, earlier this month, we announced a significant alliance for DNA Data Storage, which brings together the leaders in this field to advance an industry roadmap and drive awareness and widespread adoption of this new long term storage option. We, along with Microsoft, Western Digital and Illumina, our founding model and several additional organizations working in this field have joined the group. It is important to note that this alliance does not change the timing of our internal technology roadmap. What it does is build consensus around the opportunity for new storage media, priming the market when the technology is ready for entry, and we are pleased to lead the charge. At this time, I'd like to turn the call over to Jim to review our financial results for the quarter.
Okay. Thank you, Emily. As Emily noted, we have delivered another very strong quarter in what continues to be an uncertain environment due to the COVID pandemic disruption. And we'd like to thank all our twisters for another terrific quarter and an outstanding year of progress. Our orders for the fiscal year achieved a record $116,700,000 and revenue was $90,100,000 and our gross margin scaled to 31.8 percent for the year.
We believe it is important to have a strong balance sheet in these uncertain times and we concluded the year with approximately $290,000,000 cash and short term investments and we exited the year with strong operational results. Our revenue for the quarter was $32,400,000 We booked 40 2,700,000 orders. Our biopharma business is doing really well with an additional 4 revenue generating agreements in the 4th quarter. And we also had record NGS revenue and orders. Our gross margin is notable in the 4th quarter was 46% and we grew our customer base to approximately 2,200 from 1300 in the previous fiscal year.
Now let me share with you more details on our orders for the Q4. Our NGS orders were $22,600,000 and we received orders from approximately 600 NGS customers with the top 10 accounts placing orders of approximately $15,000,000 in the 4th quarter. And for the full year, our NGS orders were approximately $54,000,000 and that's comparable to $28,000,000 in fiscal 2019. So we're making a lot of progress in MGS and our larger opportunity customers contribute about $34,000,000 of the total FY 2020 MGS orders. Our pipeline for our larger opportunities continues to scale and we're now tracking 150 accounts, up from 130 2 accounts we noted on our August earnings call and 55 were adopted and that's an increase from 47 in the previous quarter.
In the previous quarter. Now turning to synbio. Our synbio orders and this includes orders from genes, libraries and oligo pools and ginkgo for $16,200,000 in quarter 4 and brings our total synbio orders for the year to approximately 58,000,000 dollars and that's a 40% year over year growth. For the year, total jeans orders grew from approximately $33,000,000 in fiscal 2019 to $47,000,000 in fiscal 2020 and Ginkgo orders increased from $8,000,000 to approximately 12,000,000 dollars And please note Ginkgo accounted for about 10% of the total orders for the year. Now to biopharma.
Biopharma orders in quarter 4 were $2,900,000 and we signed 4 additional revenue generating partnerships, bringing the total to 13, with 8 of those including milestones and or royalties. Biopharma orders for the year were $5,200,000 and we're looking very strong heading into fiscal 2021 with future upside from milestone and royalties. In terms of our segment orders, we saw the academic segment pickup in Q4 with orders of $8,500,000 as compared to $5,400,000 in quarter 3 with a large order of $2,000,000 from 1 institution, which we'll rebuild over the next couple of years contributing to our growth. Our Healthcare segment recorded strong bookings in the quarter with $23,600,000 due to strong orders in NGS, biopharma dollars which included Ginkgo bookings of 3,500,000 dollars which included ginkgo bookings of $3,500,000 Please note, we provide orders not directly translate into revenue, but more to provide a trend line for each group. We also anticipate both NGS and Ginkgo orders to be lumpy quarter to quarter.
Now moving from orders to revenue. We reported revenue of $32,400,000 in quarter 4 and that's another record quarter for Twist. Our NGS product revenue for the quarter declined to $20,200,000 and for the year grew from $21,000,000 in fiscal 2019 to $44,000,000 in fiscal 2020. As expected, the second half of the year was very strong for our NGS products and $9,000,000 was booked and billed to 1 customer in quarter 4. This is a customer we have worked closely with for a number of years and is another confirmation of the transition from Smith Microarray to NGS.
And also note in our original FY 2020 revenue projections, we anticipated approximately $3,000,000 of this order to come in during Q4, so well lumpy, less so than it may seem on the surface. Now touching on synbio. Our synbio product revenue for the quarter was $11,000,000 which is down sequentially from $11,800,000 in previous quarter. However, Ginkgo declined from $2,800,000 to 1,800,000 dollars sequentially and that's mainly due to the timing of the projects. Our Q4 jeans revenue was 8,600,000 dollars versus $9,600,000 in quarter 3.
That's mainly due to Ginkgo as noted earlier and revenue decline due to the summer impact of EMEA. For FY 2020, our synbio business was approximately $44,000,000 versus $33,000,000 in FY 2019, with Ginkgo revenue for the year at $10,700,000 versus $9,200,000 in the previous fiscal year. And Ginkgo now accounts for approximately 12% of our revenue in fiscal 2020. Our jeans business, which is doing extremely well, we shipped approximately 339,000 genes in the year and that's compared to 288,000 last year. And our genes revenue grew from $26,700,000 in FY 2019 to $35,200,000 in FY 2020, and that's an increase of approximately 30 2%.
It's worth highlighting the revenue in our longer genes, which is 3.2 kilobytes genes in FY 2020 climbed to 14,000,000 dollars and that's up from $9,000,000 in FY 2019. Our preps, which we launched in April, right in the middle of pandemic, continued to scale nicely and we've billed approximately $1,000,000 for the year. Now biopharma. Our revenue for the quarter was $1,300,000 as we build a rapid antibody discovery project activities, which includes panning, screening and high throughput IgG purification. We're very excited by the progress we're making and highlight that our biopharma revenue rose to $2,400,000 for fiscal 2020.
I will briefly cover the regional progress. U. S. Grew to $59,200,000 in FY 2020 from $36,900,000 in fiscal 2019. EMEA revenue grew to $25,800,000 in fiscal 2020 versus $14,700,000 in fiscal 2019, another year of terrific growth in EMEA.
And EMEA now accounts for 29% of our worldwide business. APAC revenue for the year was $5,100,000 versus $2,800,000 in fiscal 2019. In terms of how we're doing by industry, the industrial biotech revenue was $29,000,000 for fiscal 2020, which is approximately 32% of our business. Healthcare is now our largest segment and accounts for 44% of our business with revenue of $40,000,000 in fiscal 2020 as compared to $17,400,000 in fiscal 2019. This growth is primarily due to business success in NGS, biopharma and continued success in penetrating large pharma.
Academic revenue in fiscal 2020 was $19,600,000 and that's compared to $13,800,000 in fiscal 2019. Agricultural revenue is $1,400,000 versus $1,200,000 in the previous fiscal year. Now moving down P and L. Our gross margin for the quarter was $14,900,000 or 46 percent of revenue. And for the year, our gross margin was 31.8 percent of revenue and that's up from 12.8 percent in fiscal 2019.
As we've noted before, the increase in our margin reflects the impact of scaling our revenues, leveraging our fixed costs and the benefits of a higher mix of NGS products and terrific execution by our organization. Our operating expenses, excluding cost of revenue for the Q4 increased to approximately 39,000,000 dollars And that brings our total operating expenses excluding Agilent Litigation settlement to 100 and 46,000,000 as compared to approximately $116,000,000 in fiscal 2019. In terms of year on year comparison, R and D for the year increased to $43,000,000 from $35,700,000 in FY 2019 and that's due to increased investment in our resources. We increased our headcount from $102,000,000 to $130,000,000 And also note that FY 2020 includes $2,500,000 offset expense offset for the IRPA grant. In terms of SG and A, this increased to $103,300,000 from $80,100,000 in FY 2019 and that's primarily associated with investments in our commercial organization.
We've scaled our organization from 122 heads in sales and marketing to 166. Also, we had increased commissions associated with our higher revenue and stock based comp increased by $5,000,000 from FY 2019 to FY FY 2020 and SG and A. Our net loss for the quarter was $24,300,000 and that's down from $28,200,000 loss in previous quarter and that's mainly due to the higher gross margins associated with scaling our revenue. Note, stock based comp for Q4 was $5,100,000 as compared to $4,100,000 in quarter 3. Depreciation in quarter 4 was $1,900,000 that's up from $1,700,000 in Q3 as we brought on new the new writers.
For the year, our net loss was approximately $140,000,000 and that's including $22,500,000 for the litigation settlement Agilent, which was booked in quarter 1, also includes approximately $17,000,000 for stock based compensation and approximately $7,000,000 for depreciation. CapEx was approximately $10,000,000 for the year with major investments for capacity expansion, primarily for new writers and lab equipment. I will now cover our outlook for fiscal 2021. We're positioning the company for strong growth in FY 2022 and beyond. And although there's a great deal of short term uncertainty and challenges of the pandemic keep evolving, our view is FY 'twenty one will be a dynamic year.
Our revenue guidance for 2021 is in the range of $110,000,000 to $118,000,000 This includes Ginkgo revenue in the range of $11,000,000 to $12,000,000 for the year. Non Ginkgo Syn Bio is estimated to be in the range of $41,000,000 to $44,000,000 for the year. NGS revenue is estimated to be in the range of $54,000,000 to 58 000,000 and biopharma revenue is expected to be approximately $4,000,000 for the year. Our gross margin guidance for the year is approximately 32 percent and will scale from 27% in quarter 1 to 37% in quarter 4. Our margin as always is influenced by mix and also impacted by new capacity utilization as we launched new products such as IgG and scale our DNA preps.
We're targeting very large growing markets and expanding significantly faster than those markets. We have demonstrated our platform scales and demonstrated our ability to tap into additional revenue streams. We're optimistic about the opportunity ahead and continuing to invest for growth and build our moat. And as such, we're stepping up our investment and innovation in fiscal 2021. Operating expenses, which includes R and D and SG and A, were approximately $174,000,000 for the year.
We're stepping up the blades in increasing our investment in R and D to approximately $60,000,000 in fiscal 2021, and that's up from 40 $3,000,000 in fiscal 2020. In addition to increasing our core synbio and NGS resources, we're increasing our DNA storage investment to approximately $15,000,000 in R and D and biopharma investment to $12,000,000 in fiscal 2021. Note the DNA storage investment in FY 2020 was about $3,000,000 Our net loss guidance for the year is expected to be in the range of 136 $1,000,000 to $141,000,000 and this includes stock based comp of $20,000,000 and depreciation of $7,000,000 CapEx guidance for the year is $30,000,000 and that includes expansion into our new facility as Emily highlighted. As we roll through our December quarter, we're projecting a revenue in the December quarter to be in the range of $25,000,000 to 26,000,000 dollars And in summary, we view our outlook to be prudent for fiscal 2021. Fiscal 2021 will be a dynamic year and we're stepping up to the plate and pursuing large growing markets and investing for our long term success.
And with that, I'll turn the call back to Emily.
Thank you, Jim. In summary, we achieved an amazing quarter year, bringing light into the challenges of 2020. We beat our pre COVID-nineteen revenue expectations, delivering exceptional products and more importantly, service to our customers throughout the global pandemic. 2020 has tested our people, our plans and our resilience and I'm extremely pleased to say that as an organization, we have risen to the challenge.
In a
tough context, we are like MacGyver. We use the tools we have, we create those we do not and we always, always pursue. Looking into fiscal 2021. For Syn Bio, we expect continued growth and diversification of our revenue stream, ramping from AfroQ's products including DNA preps and AGT, launch of clonal ready gene fragments, B2B solutions to allow us to capture specific listed site institutions and a significant index investment in our factory of the future to prepare for strong growth in 2022 and beyond. For LGS, we expect continuous revenue growth and customer ramping production, full launch of methylation solution, technical addition of UMI, continued conversion of particularly in AgBio and an expanded OEM strategy.
For biopharma, we will continue to sign partnerships to expand our technology base and generate revenue, and we will also begin to advance our internal pipeline of antibodies pursuing our licensing opportunities over the next 18 months. And for DIA Data Storage, we'll continue to drive our engineering roadmap towards further naturalization. In addition, we will execute on our agreement with IATA and begin to pave the way for market adoption of this new storage medium. As COVID-nineteen cases are experiencing rapidly around the world, we do not know what fiscal 2021 will bring, but we do know that we will face it head on, navigate through it. We have an incredible team of swisters driven to make a broader impact through the power of our platform.
With that, let's open the call for questions. Operator?
Our first question comes from Tycho Peterson with JPMorgan. Your line is now open.
Hey, good morning. I'll start with the guidance. You are coming in a bit below the street here at the high end. I understand you want to be conservative. So maybe Emily, can you just talk about where you see the conservatism baked into guidance?
I know you're talking about $4,000,000 in biopharma contributions milestones. Could there be upside there? And then on Ginkgo, that does imply at midpoint a decent deceleration, actually down about 11%. So can you maybe just talk to the dynamics there and what would be driving that to decline double digits? Thanks.
Yes. Thank you, Tycho. Indeed, we are prudent. I would let Jim give you more details on this question.
Yes. Hi, Tycho. It's Jim. Yes, I mean, we came off a very strong quarter 4. As usual, we want to be prudent and really give guidance that is meaningful and thoughtful.
So we've built up particularly on NGS. We've built up our revenue by customer, understand where the customers are in terms of converting through the pilot and scale up and adoption phase. So we see potential opportunity there. Ginkgo, we have a 4 year contract. We're about 2.5 years into the contract.
And as ginkgo business is lumpy, we want to be mindful of the challenges that we're all going to face over the next year. So we believe we've pitched our business very conservatively. We see upside in synbio. We continue to make progress on large pharma. We see upside in terms of IgG.
We also are doing well on scaling our DNA preps. But as we stand back, the pandemic is raging here in the U. S. And we want to make sure that we calibrate our focus for the future, which is continue to grow for FY 'twenty two and beyond, invest strongly in FY 'twenty one and position us when we get to the other side of this pandemic.
Okay. But just so we're clear, because Ginkgo and the company is obviously growing very quickly, but the 11% decline, you're just saying that's lumpiness in relation to that part of the guidance?
Yes, that's just lumpiness in that part of the guidance. We have a 4 year contract, which is scaling. The minimums actually come in above the 11 to 12, but based on where what we're seeing is, I just want to be measured in our forecast. It's not a reflection in Jenkins business, which is a reflection on our conservatism.
Okay. And then Emily, on the COVID antibodies, I know you talked in the press release about either developing these on your own or partnering. I'm just curious about how you're thinking about that opportunity. We've seen some of your peers like Adaptive with the Amgen deal, that Amgen chose not to move forward with that. So what's your view of the potential to partner up on the COVID antibodies?
And what would you potentially do all 3 internally if you couldn't find a pharma partner?
Thank you. It's a great question. So from the beginning, the idea was to use the delight of COVID to generate some data that we could leverage in a marketing approach. And the data that we've had from COVID has been useful, including some of the deals we have in biopharma and in making sure that the funnel is full. That being said, we if there's opportunities to license it to license one of these out, we will pursue it.
However, we did start late. We started at the end of March when everybody started looking for COVID antibodies in the early January. In addition, COVID is not a hard to predict target. And so the benefit of our platform, which is being able to finance our risk against hard to predict target, is not fully applicable. So that being said, we now have really positive data in a preclinical animal model, so that is good.
And we've always said that if we license one of those antibodies, it would be an upside for us. So we are seeing execution with a number of groups. But this probably not a big drive for us to do it ourselves. I don't think we are set up to go and do clinical work with those antibodies ourselves. However, it's still possible that someone licenses one of them out.
However, even if that does not happen, the market impact and the benefit of those antibodies to give us credibility and help us in our commercial endeavors for biopharma has been already very, very positive.
Okay. And then before I hop off, 2 quick ones. You had an NGS one timer in the quarter. Can you maybe just talk to that? That was maybe stockpiling?
And then separately on the Microsoft Illumina data storage announcement, are there milestones we should be paying attention to for 2021 for you guys? Thanks.
All right. Yes, Taycan, on NGS, the $9,000,000 is not stockpiling. The $9,000,000 is one large customer we've been working with for over 3 years. We had originally anticipated that we'd ship about $3,000,000 in Q4 $6,000,000 in FY 'twenty one. They come back in and basically want to build all the product in one lot.
They're actually using that right now. So we're very optimistic. This is a snip microarray to NGS conversion. We're very optimistic about seeing some more large orders coming in the future barrels.
And then on the data storage on the Alliance, we don't yet have the details of future public announcements for the Alliance. That is the work that the Alliance will we work together. Again, the idea of the Alliance is to help prepare the market such that when there is a product available, the market is already primed. So there will definitely be activities in that market preparation point of view. And then in parallel, our technical work is going full steam ahead.
So that is a milestone that we are in full control. We may not be able to give a substantial update every quarter, but I would anticipate that over 2021, there should be more update on the technical side.
Our next question comes from Derek Sprinkle with Cowen. Your line is open.
Good morning, everybody. Thank you for taking my questions. I just want to start with a couple of questions on, I guess, what I would call end market outlook questions. So one's on pharma, one's on data storage, and then I want to follow-up with a couple of financial questions. So starting on pharma, I may have missed it in actually, no, I did catch it.
So you talked about in your prepared remarks the fact that heading into 2020, you were looking for a total of 7 to 8 biopharma partners, I think the up to 13, if I took that down correctly in my notes. With that in mind, as we think about 2021 pharma revenue guidance of $4,000,000 I'm just wondering what's driving that? How much of that is milestones, product sales, collaboration? Essentially, what are the components of the $4,000,000? And then what's the importance of the new partners to that number, especially some of the more recent ones?
Thank you, Doug. Yes, so we at the beginning of the year, we guided 5 to 10 partnerships,
and we
ended up at 13 paid partnerships. And then in addition, in addition to upfront payment where we get paid, it's important to us that we start accumulating milestones and royalties so that we can stack them. And so 8 of those partnerships had milestones and or royalties. And so to answer your question, when we announced an order number, that is the upfront payment part of the business. That is the part that we know we would get for sure.
And even though that payment is received upfront before we start the work, which we book the revenue as the work gets done. And so the revenue next year will be the upfront payment that we booked at whole order last year. And then as we do the work, we can convert it in revenue. So I'll answer 2 things. One is that it takes some time to do drug discovery.
And even though one of our key attributes is that we are fast, in addition to being able to do hard drug targets, it's not a 30 day thing. And so there is a process that we're running in house. And when we get to the end of the process, at that point, we will have converted the full upfront payment from booking to revenue. And so that's what the €4,000,000 reflects. And then as we sign more partners this year, some of that work may be completed in 2021 and that may increase the revenue?
Or if not, it's going to be revenue that we capture in 2022? And then the second thing I'd say is that in addition to that upfront tenant that we do report on every quarter is there as orders or revenue. In addition, we are stacking up milestones on royalties, which we believe will be the majority of the economic value. Unfortunately, we're not in control of when that happens. And so for instance, some partners may be motivated to be to grow very fast, may slow symptoms as programs inside the company changes.
There may even be some assets where the partner decides to completely abandon it for business reasons and nothing to do with our antibodies. And so therefore, the more business the more partnerships we can sign with the more maximum royalty, that means that the sooner we get 1 of the 2 antibody into the clinic and the sooner we stop collecting those milestone revenues. However, we're not going to guide on it. So when that happens, that will be upside.
No, that's helpful because probably saying things in a much less eloquent way, but probably saying the same thing in a different way. The $4,000,000 is essentially all but locked in based on what you have contracted and booked already. It's just predicated on your assumption of when certain work is going to be done. And to the extent that any of that's accelerated or there were surprise milestones or you added additional partners that would be upside to your target, if I'm understanding correctly?
Yes.
Okay. And then on data storage, I just want to clarify a couple of things. This may reveal a little bit of my ignorance on this topic. But in your prepared remarks, you indicated that you achieved significant milestones on the DNA storage roadmap to miniaturize the silicon platform technology down to 150 nanometer pitch or less. You also indicated that you can consistently synthesize DNA using 5 micron devices at 10 micron pitch and that you fabricated the new R and D stage silicon chip with 300 nanometer devices on a 1 micron pitch chip.
I don't believe I've heard you talk about pitch before, nor do I recall you delineating between different device types. As recently as the recent Analyst Day when you talked about this, you really focused reducing feature sizes. So I guess the question is, I'm just wondering what the significance of what you described in your prepared remarks is and what this means in terms of time lines to actual product and revenue?
Yes. Thank you for the question. I'm happy to clarify. So you're correct that we have been talking about feature size. And so the current platform we use today has a feature size of 50 macrons.
So that means that the dimension on the silicon chip where we grow DNA has is set to a surface of 50 microns. And in order to lower the cost of writing the cost of writing DNA, we have to make that feature size smaller. And so we had said that we go to 1 micron feature size and then the micron. In addition to that, you need to know how far away the next feature is because if we reduce the feature size from 50 micron to 1 micron, But the next feature is still 70 micron away. So if the pitch is still 70 micron, you're actually not lower in cost.
So you have to do both. You have to reduce the feature size and you have to reduce the pitch so that on the same surface of silicon, you get more DNA sequences. And so that was always our intent. So well, I'm not changing anything. That was always the road map, but we're providing a little bit more information to get even more credibility about the benefit and the great accomplishment that's graduating.
So we're doing both. We're both shrinking the size of the device and we're packing them closer to each other because you need both of those things to have the cost go down. So basically, there's no change on our side, but we are providing a bit more information to the Street.
Okay. And then maybe just a couple more financially focused questions. You're essentially guiding to, if I'm doing the quick math right, a 40% increase in R and D investment in 2021. I know Jim in his prepared remarks broke down the priority areas for investment. I'm just wondering how we should measure success for this investment and over what time period?
And kind of a similar question on the CapEx front. I believe that you talked about, I think it's $30,000,000 in CapEx investment this year, including the investment in the factory for the future. If you could just talk about what the expected timeline and magnitude of returns that you're targeting on that investment? Yes. Really the
bookings were hot, although really the bookings were hot, although it does include 9,000,000 of orders on NGS from 1 customer. We continue to see our customer base expand, particularly on the NGS side. We're seeing lots of opportunities because of our product strength there. As we step back, we did increase the R and D investment right from 43 to roughly 60. We're stepping up the both the NGS and Syn Bio core investment.
We're also increasing the data storage investment. It was roughly about $3,000,000 this year to about $15,000,000 in 'twenty one. Obviously, data storage is more longer term as Emily highlighted, but we are seeing the ecosystem for data storage increasing. We're making progress from a technical point of view. In terms of the core business, we were asked a number of times to give guidance this quarter for the year.
The challenge we have is giving guidance for the middle of pandemic reaching. So we believe we've got prudent guidance out there. We're really looking to FY 'twenty two. We're investing in the factory of the future, which will come online sometime in 'twenty two, but that's also positioning us for 'twenty three. We believe we're really going to open up the larger market opportunity in synbio with rapid turnaround time.
I mean, our goal is I mean, we've tapped into new revenue streams from the platform, including IGG. We're seeing a DNA prep scale. We do need to continue.
Our next question comes from Catherine Schulte with Baird. Your line is open.
Hey, congrats on a great finish to your fiscal year and thanks for the questions. If first, maybe Jim, to your last comment around guiding in the middle of a pandemic. I guess, what are your assumptions in terms of COVID duration and severity? I'm just curious to get a sense for how you're thinking about that in terms of the impact on your core customers and then how long you're assuming the COVID related product contributions will continue?
So a couple of comments. I mean, I we have a crystal ball. I think FY 'twenty one is going to be dynamic. I think everybody else has a crystal ball and what's happening with COVID. All we know is that during the last 6 months, we've adapted as a company.
We continue to adapt in terms of the environment. As we go forward next year, I mean, our goal is to continue to build our customer base. Our goal is to launch new products and we're really looking through 2021. And who knows when all the vaccines positioning for those years. It was interesting, sort of microcosm of our decision making was back in the February March timeframe when COVID hit.
We get we had lots of questions in terms of what should we do, should we cut back in terms of employee salaries, should we really be conservative. What we did is we actually get more aggressive. We stepped up our investment, as you probably saw. We gave our employees shelter in place compensation during the March, April, May, June timeframe. And I think that's worked to our advantage for this coming year.
We continue COVID testing. We continue to innovate and really put more wood behind the arrow in terms of the innovation. I mean, it's a large growing market. The market is scaling at 20%, 25% a year, and we're positioned to be number 1 in that market.
All right, great. And then Emily, you mentioned the new factory of the future will allow you to address different areas of synbio that you can't today. Can you just elaborate on those opportunities and what the top priorities will be for that factory?
Yes. Thank you for the questions. So as you know, the single market is not one size fits all. And so we've built we already built a platform that is very flexible and we can make custom DNA. People can get their DNA in different vectors, in different tubes.
They can get it dry. They can have it in buffer. They can normalize. So there's many, many options. And so for any customer that is very, very high throughput that needs 100 genes or more, Our scale is really a winning factor, and we do really well in that segment.
There's a segment where we can't participate much, and that is the ultrafast DNA synthesis segment. And so right now, we sell DNA in 11 to 15 days turnaround time. Anything that's below 10 days turnaround time, we cannot serve. And we see that, that is a market that is poised for growth, especially as speed is important to some partners like biopharma. So we believe that an investment in a significant investment in speed could be transformative for us in Finbio.
Okay, got it. And then in terms of advancing your internal pipeline of antibodies, what would you view as a successful outcome in terms of the number of candidates you're able to out license in fiscal 2021?
Yes. So taking the year out, taking 2021 out, the what we're going to do is, from the targets that we are pursuing as quickly as possible, develop and optimize antibodies. What we found is that we do need to do a little bit of preclinical development to convince partners to look deeper at the antibody, which is no problem. We that's something that CROs can do really well. And so we do find partners like in the case of our COVID-nineteen, I believe we find partners to do get functional data in preclinical animal models.
And then so success for us would be to license antibodies at that stage, which should give us better economics than when we sign a partnership with an upfront payment because in this case, we are taking a bit more risk. And then we have chosen the first seven targets, that we believe are hot targets. And so we should get some we expect to get some significant ROI on our investment and also the credibility that it brings. In terms of timing, in the remark, we mentioned 18 months just because it does take some time. So as you know, we as a management team, we are focused on the short term and we execute quarter to quarter really well.
But we have a slow due date medium and longer term view of there are things we can do today to make sure that we enjoy the fruits of those seeds we plant, not this year, but in subsequent years. So ultimately, the measure of success for those seven targets will be around the licensing economics that we get when those get licensed.
All right, great. Thank you.
Thank you. Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys. Thanks for taking my question. I had 3 questions. 1, Jim, when you look at the guidance, maybe
at
a high level, you grew 65% in a pandemic year, Even excluding the one time or regarding Q4, revenue growth was well north of 50% and the guidance is looking at low 30s kind of top line growth for 2021. Is this just a larger revenue base or perhaps maybe put some of these numbers in context for us? Why would revenue growth slow down?
Vijay, thanks for the question. So just stepping back, if you look at FY 2020, we did have $9,000,000 from one customer that came in at the end of FY 2020. We had originally anticipated that would have been $3,000,000 in FY 'twenty and $6,000,000 in 'twenty one. So you could take $6,000,000 out of our FY 'twenty and you're down to $84,000,000 and you put that on top of what we originally forecasting and you're in the mid-120s. So the NGS business is lumpy.
And the point to note is we are scaling aggressively in that business. I think the $9,000,000 is a significant win for the company, and we're thrilled to be able to book it and ship it 1 quarter. We see other large emerging opportunities ahead of us. And then also it's very difficult to project the timing of those opportunities so far. It's always been the upside.
We are tracking about 150 large opportunities for NGS. Our view is they continue to scale nicely, 57 have adopted. When you're trying to do a forecast in the middle of the pandemic, we try to be thoughtful and prudent in terms of what's based on our bottoms up and based on our latest communications with our customers and less than based on our latest product strategy. We want to give numbers that we've got opportunities to provide upside to. So if we go back to the guidance we had last year, guidance was $80,000,000 to $84,000,000 We withdrew it in the middle of the pandemic.
And so you normalize for the $6,000,000 We hit the top end of the guidance. And our belief is we're building for FY 'twenty two. We've got a fabulous platform that's scaling and we continue to build our customer base. So I'm very bullish in the future.
Understood. And when you think about the revenue base ramping up, when do you think gross margins could normalize into the 60% sort of target that you guys have?
Well, we hit it was interesting, we hit 46%. I mean, we've proven out our business model. When we set the financial guidance up for the year, we were talking about 32% gross margin for the year. We essentially hit that gross margin for the year, albeit we had additional costs associated with shelter in place compensation. We are ramping new product capacity.
As we go forward, we're still seeing in the 50% to 60% gross margin range. It depends on mix, depends on capacity utilization. We've certainly proven how we can get close to 50% gross margin. And my view is that as we continue to scale with the new factory at $500,000,000 we're positioning ourselves for very strong gross margins and upside revenue. And we should be able to deliver the 60% gross margin range.
Understood. And one last one, Emily, maybe on the 7 antibody targets or disease areas you're going after. And I think I heard you mention your plan or expectation is to out license them over the next 18 months. If you did manage to out license all 7 of them, what could the revenue contribution be here in terms of upfront payments?
Thank you. We don't need to license out 7 of them to be successful. Some of those are at least within the 18 months period. What we started the process we started was to say, what are the hot targets of today? So we all remember the craze around PD L1 inhibitors.
So now it's too late to have a PD L1 inhibitor, but there's a point where PD L1s were hot. So we started by seeing what are the PD L1 inhibitors of today. So those are the targets that we have. And so therefore, those are what we consider our targets. And therefore, if we're able to license some of them out, the contribution could be substantial.
But it will probably be a buyback type deal with some upfront payment and probably the majority of the upside as a form of milestones and royalties so that we can participate in the upside. But since the timing and the size are somewhat uncertain, It's outside of the guidance. Whatever we get will be upside. However, at this point, our analysis shows that it could be significant.
Thanks, guys.
Thank you. Our next question comes from Puneet Souda with SVB Leerink. Your line is open.
Yes. Hi, Emily and Jim, thanks. So first question, just wanted to clarify on the NGS order. Is there any reason you're not expecting the snip customer that moved to NGS to not continue with Twist next year? I mean, I appreciate this was significant lumpiness in the quarter, but just trying to understand, given the seasonal nature of it and I assume this is a DTC and not a tissue or liquid customer that they should come in next year, but correct me if I'm wrong on that.
So good question, Puneet. We can't really share the specifics of the engagement. All we can share is that we've been working with this customer for 3 years. We see large emerging opportunities in this space as we've talked about the migration from SNP array to NGS that this validates that migration is happening. And we are seeing more opportunities.
Don't want to we don't want to give away our competitive situation here because obviously people are watching us. Our view is that the customer is extremely happy with the product and we're looking at further engagement. Timing of that is uncertain for a couple of things. One is a large order. We had originally anticipated it was between $3,000,000 to be delivered in Q4 $6,000,000 this coming year all came at once.
They could come back in the end of next year and do the same thing, but that's too far out to project. We have not in our forecast included in like another $9,000,000 order. We built our forecast up by customer. And customer situations change based on their end market situation. So we've been prudent in terms of NGS guidance for 2021.
Okay. Sorry, go ahead. Do you have something to add?
Yes, yes. I think the other point I would make is that when we came out with guidance for this year, our guidance was originally about 7 to 40. So clearly, the transition and the scaling of our larger accounts is happening. And timing is just a little bit difficult to predict. That's why we're projecting the NGS numbers of roughly around 54 to 50 8 this coming year.
Okay. Got it. That's helpful. And my second question is on liquid biopsy. Wondering if you could provide any metric or give us a sense of the traction you're seeing there overall.
Obviously, number of trials here are ramping up and some of them in screening as well and across MRD and other segments of the market. And I appreciate the agreement that you have with Grail. But wondering if you can provide something on that and what sort of what's built into the expectations for FY 'twenty and within NGS in that segment?
So thank you, Puneet. So we are deeply engaged in with the liquid biopsy market, not only in terms of the benefit of the platform that we bring is particularly effective in liquid biopsy. As you know, in liquid biopsy, you have sequence very, very deep. And so the uniformity that we bring, the benefit of that uniformity in terms of lowering the sequencing cost, the deeper you sequence, the more important it is. And so at 50,000x coverage, we are even more competitive than for cancer analysis at 500x coverage and even more than for a rare disease analysis at 30x or 50x coverage.
So the product in itself is particularly adapted from the performance point of view for 2 liquid biopsy. 2nd, we are adding to that benefit to the extent that some people look at net election state. We've launched for the access customers and we launched more broadly. A really performant and differentiated solution for methylation. We are adding UMIs.
I'm happy to go into the details, but those are molecular barcodes that are especially useful for liquid biopsy. So liquid biopsy is clearly a focus of ours oil because the product is particularly adapted to it and because the potential markets are really big. So that's the good news. However, we can't really describe what our customers do unless they disclose it themselves. So we are fortunate that in the corporate mechanics of GRAIL, they were preparing to do an IPO.
The S1 got released. I think it again shows the potential power of the platform, but we are dependent on our customers to disclose the platform they use. And then in addition, while things are going really well, we can only guide to what we see. And our anticipation is that once some of those clinical trials, one of those validation gets completed and the products are commercial, the volume could be even bigger than they are. It could be substantial.
So that's why we are confident in the ramp. But we're not necessarily in control of the timing. And so therefore, we are prudent in what we guide. But again, we believe that we have a quite differentiated platform, which is especially applicable for liquid biopsies.
Okay. That's fair. Appreciate it. It. And my last question is on biopharma and this is a bit of a longer term question.
When you look at long term care for the revenue that you are getting currently in upfront deals and early milestones. It appears to me that given the trial given that it takes about 5 to 10 years for a clinical trial to actually read out even after getting into the lead candidate into the trial. So it appears that the outcomes here are much more longer term. So given with that in mind, when is the earliest we can see Twist Biopharma lead candidate getting into a clinical trial? Do you think that can happen in 2021 or do you think that's going to take some even longer time?
Thank
you.
Well, thank you. This is something we are very interested in getting because the next the first time we will get a milestone is when an antibody is IND ready from one of our partners. So that's kind of the first gate. And so we're very tested in that for two reasons. One is to collect cash.
And then second is because another big inflection point for biopharma will be when an antibody enters the clinic and the Twist develops and optimize antibody gets injected into a human. And so we are very, very motivated to get to that point for those reasons. However, it is quite outside of our end. And so typically, once you have an antibody, you can get it in the clinic within 2 years. And so if you go back to the timing of our announcements, it could be within 2 year of that.
But again, we're not in full control. We very quickly can deliver the antibody. But after that, the partner is in charge, and the fee that we should go is not something we can influence a lot. However, that is that's why we have not been focusing on one partner. We've been focusing on let's get as many partners as we can because then you maximize the speed at which one of them is going to go into the clinic.
And I'm currently showing no further questions at this time. I'd like to turn the call back over to Emily Laprost for closing remarks.
Thank you, Danesh, and thank you all for joining us today. We remain inspired by science, and at Wix, we have an amazing team that continuously uses grit to move the company forward to make an impact for our customers and the world. So please take good care of yourself. Stay safe, socially distant and wear a mask. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.